If you craft and sell your own sodas you already face the challenge of winning customers to your carbonated beverages in an environment where commodity prices, market saturation and health concerns all inhibit your ability to make a profit. As a new company entering the market, you’ll need a proactive strategy to position yourself as a unique option in order to stave off the need to lower your prices to compete.

Industry Decline

Numbers don’t tell a positive story for the soda market industry in general. U.S. consumption of soft drinks has dropped steadily during the past eight years. Many major companies raised their prices when commodity costs surged in 2011, but those increases in 2011 and 2012 led to a predictable drop in consumption. However, while the big companies compete with each other for mass-market audiences, craft sodas can effectively find a niche serving local markets or providing unique ingredients or flavors that drive demand.

Market Saturation

Market saturation can make it hard to win space on store shelves, in restaurant refrigerators or in other commercial settings. It increases the pressure on soda companies to craft their market strategies to get noticed, whether it’s by targeting a specific, underserved niche; coming up with a creative marketing campaign; or picking different settings to sell your soda, such as farmer’s markets or flea markets. This can be particularly important for sodas with fresh ingredients and no preservatives that must be consumed within a few days and can’t be left to linger on crowded store shelves.

Pricing

New entrants to the market generally lead to pricing pressures. With increased competition, customers have more power to lower their own costs by seeking a cheaper solution for their soda needs. When coupled with rising commodity prices, this has the unfortunate effect of squeezing a soda company at both ends and crippling profit margins. This makes it critical for soda companies to stress their value proposition and keep the consumer decision based on factors other than price. For example, a soda company that uses only local ingredients or specializes in unusual soda flavors may face less risk from new market entrants who don’t target that particular niche. A soda that has established customer demand at a particular location can cite that track record to bolster their position with other stores.

Other Competition

Many restaurants see craft sodas a natural addition to their offerings since the special care taken towards their construction presumably matches what goes into their food. That’s an opportunity, but there’s also the risk that comes from restaurants deciding to create their own sodas in-house rather than seek vendors. Craft breweries may similarly test the soda market as well to serve more customers and utilize their existing facilities. If you have an established relationship with a restaurant, make sure you continue to market the synergies between your customers and the restaurants, and how your brand harmonizes with theirs. It also helps to ask your loyal customers to ask for your soda by name, since this indicates a demand for that particular product as opposed to soda in general.